The Internal Revenue Service recently contacted 100,000 tax return preparers who didn’t follow the new IRS registration requirements effective January 2011. Preparers must now sign tax returns they prepare and include their Preparer Tax Information Number (PTIN), according to Accounting Today. Tax preparers who receive the IRS notice may still be using Social Security numbers or outdated PTIN numbers.
Unscrupulous tax preparers may try to avoid the new program by not signing returns they prepare. Consumers should not use paid tax preparers who refuse to sign tax returns or enter their PTIN, the IRS says.
All this talk of “ghost preparers” is an IRS effort to improve oversight of the entire tax preparation industry. Last fall, the IRS launched a PTIN registration program, in which all tax preparers must register and pay a fee. Preparers must renew the PTIN annually.
Also, starting this fall, certain paid preparers who aren’t CPAs, attorneys, or enrolled agents must pass a competency test and a suitability check. The IRS will also require certain preparers to complete 15 annual hours of continuing education credits, starting in 2012. The IRS may also conduct periodic tax compliance and background checks on tax preparers.
Some small business owners may use an unregistered preparer to keep their small business tax preparation cost down. However, the IRS is planning to contact taxpayers who appear to have had help with their return but lack a tax preparer signature — a sign of a unregistered “ghost preparer.” The letter will explain how a consumer can file a complaint against their preparer and choose a tax preparer who’s legitimate.
The takeaway: Make sure you check your small business tax return or personal tax return for your preparer’s signature and PTIN number. You want to be sure you receive the best service from a qualified preparer, and not a ghost (oooooooo).